Lawyers BewareAvoiding the Scams
By Leonard D. DuBoff and Christy O. King

The technology boom has provided opportunities for practitioners
to work more efficiently by making available a host of time-saving, as well
as cost-effective, tools. Sadly, modern technology has also provided the less
scrupulous segments of society with opportunities to take advantage of others.

We are all familiar with the Nigerian money scams that arrive
in our e-mail boxes on a regular basis, but new versions of that scam are continuously
being developed. In fact, on Sept. 9, 2008, our office received an e-mail from
a purported U.S. Army sergeant stationed in Iraq who claims to have secreted
$25 million belonging to Saddam Hussein’s family.

Regrettably, some lawyers have recently become victims of con
artists who have begun targeting our profession. In these cases, the alleged
client, often based in a third-world country, retains the attorney to assist
with collecting a debt in the United States, then advises the attorney that
the case has just been settled. The company that supposedly owes money to the
lawyer’s new client sends the attorney a cashier’s check in settlement.
The client authorizes the lawyer to pay his or her fee from that check and
to wire the balance to it. Unfortunately, the check is counterfeit.

At least one lawyer wound up sending the phony client $192,530
from his trust account before the fake check cleared, and, as a result, this
attorney now finds himself with a host of problems. Georgia lawyer Gregory
Bartko, who received a "settlement check" in the amount of $197,530,
deposited the SunTrust cashier’s check in his account at Wachovia Bank
on April 8, 2008. Wachovia advised him that he could not draw on those
funds until April 10 to allow the bank time to determine that the funds
were available and that SunTrust would honor the check. On April 11,
the attorney arranged to wire $192,530 to his purported client’s bank.
Three days later, he discovered that the cashier’s check had been returned
as counterfeit.

Wachovia notified the State Bar of Georgia, as it is required
to do, that the lawyer’s trust account was overdrawn by more than $190,000
and, additionally, filed suit against the attorney to recover the overdraft.
The lawyer claims that the bank was negligent in not timely notifying him of
the specious nature of the
deposited check. The situation is clearly a mess, and the attorney involved
candidly admits that he has been victimized by this scam.1

At least some of the other attorneys taken in by this scam were
more fortunate, and their banks were able to recall the wire transfers before
the crooks made off with the money.2 Sylvia Stevens, general counsel
of the Oregon State Bar, has alerted Oregon lawyers to this problem3 and
reminded us to be careful with our trust accounts.4 No disbursal
should be made until we have received assurance from the depositing bank that
the check, even a certified or cashier’s check, has actually cleared,
though, as illustrated by the Bartko case, even that may not be enough protection.

Note that the same scam comes in various forms. On Sept. 24,
2008, our office received an email from someone claiming to be a London artist
needing assistance cashing checks from galleries in the U.S. and Canada. The
representative is asked to deposit the certified checks, retain a ten percent
fee, and wire the balance to the "artist."

Another game is afoot that has not directly targeted lawyers,
but attorneys are potential victims. In this situation, an individual or business
receives an e-mail from a company that represents that it is a domain name
registrar.5 Early versions were purportedly from Chinese registrars,
but e-mails have recently been received from alleged registrars in other countries,
including the Slovak Republic.

The communication advises the recipient that a company has requested
registration of a URL that is similar to that of the party contacted, but with
one or more different extensions. That is, the owner of purple.com might receive
an e-mail advising that another company desires to register purple.cn, purple.hk,
purple.tw and purple.in. The URL may even be a registered trademark of the
party contacted. The communication goes on to say that before permitting the
registration of the virtually identical URL, the registrar wishes to obtain
confirmation that the registration would not be a problem.

A party who objects to the registration is advised that the only
way to prevent it is to purchase the URL. Those who refuse to do so are threatened
and advised that the interloper will be sold the domain name. In other words,
the offshore registration company is presenting individuals and businesses
with the choice of either purchasing an unwanted URL or having an offshore
company obtain it for the purpose of causing market confusion.

Several of our clients have been plagued with these communications,
and when challenged, the offshore registration company becomes belligerent.
In one situation, the offshore registration company represented that "Goolge
paied (sic) 1 million dollars to get the domain names (google.com.cn
and google.cn) back,"6 despite the fact that there is an online
arbitration procedure that is both cost effective and efficient.7

It is clear from the several situations with which we have assisted
that the alleged offshore registration companies will ultimately back off if
ignored or challenged. Sadly, many clients have been cheated by fake offshore
registration companies, such as the one described above, and the problem has
been compounded by the fact that the credit card number of the card used to
purchase the URL has also been compromised.

Lawyers should be diligent in determining whether they or their
clients are dealing with companies that are actually authorized to register
domain names,8 and, if so, whether a legitimate company would be
aggressive in forcing the acquisition of domain names that clearly interfere
with existing rights.

Another scam that has recently resurfaced involves trademark
owners. In this situation, the scammers check the U.S. Patent and Trademark
Office’s website for the names and contact information of trademark owners.
These bunco artists are careful to avoid contacting attorneys who are the registered
agents for the trademark owners but, rather, contact the trademark owners themselves.
Letters advising trademark owners of the fact that they must do something in
order to protect their registrations and prevent them from being canceled are
sent directly to the trademark owners.

The amount requested for the service, which is often unnecessary
or premature, is significantly higher than the amount customarily charged by
trademark lawyers for legitimate work. Regrettably, many recipients of these
letters do not check with their attorneys before paying these exorbitant amounts,
and, as a result, the improper practice continues.

Lawyers should be diligent in advising their clients about new
gimmicks intended to fleece them out of their hard-earned money, though unfortunately,
even the most diligent attorneys may not be aware of the latest scams. This
being said, clients should be advised to contact their attorneys before retaining
any services related to their businesses, intellectual property or online activity.
When in doubt, due diligence through the bar association or list serves would
be appropriate in order to determine whether the requested service or opportunity
has any merit whatsoever. In addition, attorneys should be diligent in assisting
clients and engaging in self-protection whenever unusual communications are
received.

It is clear that hard economic times cause desperate people to
do desperate things. It is also clear that there is a host of amoral individuals
who continuously invent new schemes for the purpose of separating you or your
clients from hard-earned money. Caution, diligence and research may be the
only tools you have to combat the prospect of being the next victim.

3. The New York State Bar has also advised its members to be
aware of this scam, sending an e-mail entitled "Scam targets solo and
small law firms," on Sept. 12, 2008.

4. Stevens, supra.

5. The e-mails often identify legitimate registrars as their
source, making it even more difficult to detect the scam.

6. E-mail to Leonard DuBoff from "Wes at ‘SK Net
Service Company’ dated July 2, 2008.

7. See the World Intellectual Property Organization’s
website at www.wipo.int/amc/en/domains for more information on domain
name dispute resolution. See also, DuBoff and King, "Cyber Troubles: Resolving
domain name disputes," Oregon State Bar Bulletin, May 2005, available
online at www.osbar.org/publications/bulletin/05may/tips.html. Note
that many countries (including China and India) do not use the WIPO arbitration
process for disputes over ccTLDs (country code top level domains). More information
on resolving a domain dispute over such ccTLDs can be obtained at www.wipo.int/amc/en/domains/cctld_db/index.html.

8. Often the company mentioned in the e-mail is legitimate,
but this does not mean that the e-mail is actually from that company.

ABOUT THE AUTHORLeonard DuBoff is author of more than 20 books on business and intellectual property law. He was a law professor for almost a quarter of a century, teaching at the Stanford and Lewis & Clark law schools. He is the managing principal of the DuBoff Law Group, which focuses on complex business and intellectual property. Christy King is a member of the DuBoff Law Group and editor-in-chief of the firmís newsletter Critical Issues, and co-author with DuBoff of the Deskbook of Art Law, Art Law in a Nutshell, The Law (In Plain English) for Restaurants and The Law (In Plain English) for Doctors, Dentists, and Other Health Care Professionals